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Markaz recently published the executive summary of its infrastructure series covering: Power, Airports, Seaports, Roads & Railways, ICT and Water. In this research note, Markaz tackles UAE Seaports sector in terms of highlighting current position, growth drivers, and future investment areas.

Due to its strategic location, ports are an important part of the infrastructure setup in the GCC. GCC ports serve the enormous volume of trade in and out of the Arabian Gulf free-trade zones, as well as the large quantities of oil, chemicals, and other industrial exports coming out of the region. Apart from the increase in trade and oil demand, the need for economic diversification is an important reason to invest in port developments.

The UAE has a well-developed port infrastructure, with a large number of ports operational under various authorities - Dubai Ports World (DPW), Abu Dhabi Ports Authority and Sharjah Ports Authority. The geographical location of UAE provides it with an advantage of having sea connectivity to all the important regions of the world. The maximum time period taken for cargo from UAE ports to reach another region is just 27 days (Oceania) through transshipment.

Currently, UAE has 13 ports and the major ports of UAE witnessed a CAGR of 10% in container traffic from 9 million Twenty-Foot Equivalent Units (TEU) in 2004 to 17 million TEU in 2011. Dubai’s Jebel Ali port handles the largest volume of container traffic in the UAE which is 13 million TEU and further expansions are underway to increase its total capacity to 19 million TEU by 2014. Jebel Ali Free Trade Zone, located adjacent to the Jebel Ali port, is responsible for 20% of UAE’s FDI and more than 50% of Dubai’s exports.

Container Ports - World Ranking 2011

Ranking

Port Name

Country

Total TEU (000s)

1

Shanghai

China

31,700

2

Singapore

Singapore

29,938

3

Hong Kong

China (SAR HK)

24,404

4

Shenzhen

China

22,570

5

Busan

Korea

16,185

6

Ningbo

China

14,686

7

Guangzhou

China

14,400

8

Qingdao

China

13,020

9

Dubai

UAE

13,000

10

Rotterdam

Netherlands

11,877

Source: Containerisation International

Khalifa Industrial Zone of Abu Dhabi (KIZAD) port development project is the largest in the UAE with an estimated investment of USD 10bn. KIZAD Phase I is 96% complete and future port expansion will take place in three additional phases beyond 2012. The port is expected to handle 15 million TEU when fully complete.

When Khalifa Port starts operations, container traffic from Mina Zayed port will over time be transferred to Khalifa Port and general cargo will continue to be handled at Mina Zayed. Mina Zayed port is also being developed as a cruise terminal.

Apart from the KIZAD port, other projects in UAE are the expansion of Jebel Ali terminal 3 in Dubai, Mussafah Port II in Abu Dhabi, Fujairah LNG terminal in Fujairah and Shahama port upgrade in Abu Dhabi. Currently there are no port developments planned in Sharjah due to low growth in container and passenger traffic in its existing ports.

According to estimates, the GCC port throughput will increase by 46% between 2011 and 2015, but capacity will increase by almost 58% due to which port utilization will reach a peak in 2014. Port utilization is forecasted to come down from 76% in 2014 to 64% in 2015 due to overcapacity.

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About Markaz

Kuwait Financial Centre K.P.S.C “Markaz”, with total assets under management of over KD903 million (USD 3.2 billion) as of December 31, 2012, was established in 1974 has become one of the leading asset management and investment banking institutions in the Arabian Gulf Region. Markaz was listed on the Kuwait Stock Exchange (KSE) in 1997.